Interestingly, the American public is still somewhat confused about what is required to qualify for a home mortgage loan in today’s housing market. It seems the main reason why non-homeowners do not own their own homes is because they believe that they cannot afford them. Guess what. The probably can.
There are two major misconceptions when buying a home.
1. Down Payment
Most consumers overestimate the down payment funds needed to qualify for a home loan.
According to a recent survey, 53% of Americans who plan to buy or have already bought a home admit to their concerns about their ability to afford a home in the current market. In addition, 46% are currently unfamiliar with alternative down payment options, and 46% of millennials do not feel confident that they could currently afford a 20% down payment.
The truth is, there are many loans written with down payments of 3% or less!
Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.
Most people believe they need excellent credit to buy a home, with many thinking a “good credit score” is over 780. In actuality, the average FICO® scores for approved conventional and FHA mortgages are much lower.
The average conventional loan closed in May had a credit score of 753, while FHA mortgages closed with an average score of 676. The average across all loans closed in May was 724.
If you’re considering buying a home but unsure if you’re able to, give me a call. I’m happy to put you in touch with a reputable lender who can help you understand your true options today. 301-320-8349 or 703-963-0142. Email works too: email@example.com